According to the information on the FATF-site in regard of the plenary of 16-18 October 2019, the mutual evaluation report of Russia was discussed at the plenary, with a surprising outcome:
The Plenary discussed the joint FATF-EAG-MONEYVAL assessment of Russia and concluded that Russia has an in-depth understanding of the money laundering and terrorist financing risks it faces. It has established robust policies and laws to address these risks, and the country is particularly effective in its investigation and prosecution of terrorist financing. However, it should refine its approach to supervision and prioritise the investigation and prosecution of complex money laundering, especially concerning money being laundered abroad.
This is surely surprising.
Recently the German authorities in their NRA put Russia on the black list of high risk countries.
Reading the FATF text, I wonder what the value of these country evaluations is. Recently Tom Keatinge wrote the country assessment process has become increasingly politicised. He advises FATF to be more nimble and risk-based and apply greater focus to systemically important issues such as the continued failure to advance company registry transparency. He says that greater integrity is required across the country evaluation process.
- Page FATF on the plenary, 18 October 2019.
- Koos Couvée on LinkedIn: “The assessment would catapult Russia to eighth place among the roughly 90 countries assessed thus far under FATF’s 2013 methodology, behind only Switzerland, Italy, Spain, Israel, the US and the Britain“. Couvée wrote As FATF Readies Praise for Russia, Critics Anticipate Backlash for moneylaundering.com, 20 November 2019.
- Denktank wijst Nederland aan als topbestemming voor Kremlin-geld, FD 5 november 2019.
- Article on this blog (Dutch) on high risk countries in the German NRA, 23 October 2019.
- Tom Keatinge, It’s Time to Reform and Refocus the Financial Action Task Force, RUSI, 23 October 2019.
- Joshua Kirschenbaum and Jennifer DeNardis, The Financial Action Task Force Evaluation of Russia: An Opportunity, 11 June 2019.
Addition 6 January 2020
Official post of 17 December 2019 on the FATF site: “The Russian Federation’s measures to combat money laundering and terrorist financing”
The Russian Federation’s measures to combat money laundering and terrorist financing
Mutual Evaluation Russian Federation 2019
Paris, 17 December 2019 – The Russian Federation (Russia) has an in-depth understanding of its money laundering and terrorist financing risks and has established policies and laws to address these risks, but it should enhance its approach to supervision and prioritise the investigation and prosecution of complex money laundering cases, especially concerning money being laundered abroad.
The Financial Action Task Force (FATF), the Eurasian Group and MONEYVAL, assessed Russia’s anti-money laundering and counter terrorist financing (AML/CFT) system. The assessment is a comprehensive review of the effectiveness of Russia’s measures and their compliance with the FATF Recommendations. This includes an assessment of its actions to address the risks emanating from UN and domestically designated terrorists and terrorist organisations. The report does not address the justification that led to the domestic designation of an entity as a terrorist or terrorist group or organisation.
Russia recognises that it faces significant money laundering risks as a result of the proceeds of crimes committed within the country, in particular those related to corruption and its role as both a transit and destination country for narcotics trafficking. A national risk assessment, complemented by in-depth knowledge of relevant law enforcement agencies, has allowed the country to identify and understand its risks, including terrorist financing risks. Russia’s legal framework appropriately addresses these risks and the country has formal policies in place, supported by strong domestic co-ordination and co-operation, to combat money laundering and terrorist financing. However, the country needs to address gaps in its ability to freeze, without delay, assets linked to terrorism, financing of terrorism and proliferation of weapons of mass destruction, and ensure that this freezing obligation extends to all natural and legal persons.
In general, Russia cooperates with foreign counterparts, including through more than 100 international co-operation agreements with its financial intelligence unit, Rosfmonitoring. Authorities make excellent use of financial intelligence, based on a wealth of collected data and analysed with sophisticated technologies to contribute to money laundering and terrorist financing investigations. While the country has prioritised getting money back for the victims of crimes – around EUR 816 million per year – it needs to focus more on the investigation and prosecution of complex money laundering cases, especially concerning money being laundered abroad.
Russia has strengthened its oversight of the banking sector and has now mitigated the risks of criminals being the owners or controllers of financial institutions. However, deficiencies in licensing remain and the sanctions for banks that do not comply with AML/CFT requirements are not effective or dissuasive.
In general, financial and certain non-financial entities such as accountants and auditors, have a good understanding of how their services could be used to launder the proceeds of criminal activity or terrorist financing, but given that Russia is a significant centre for mining precious metals and stones, this sector’s understanding of risk is not in line with the country’s risk assessment.
Since its last assessment in 2008, Russia has strengthened its understanding of the money laundering and terrorist financing risks it faces and has developed a robust legal framework to address them. The country has taken a number of actions that have delivered concrete results. But, the country needs to address the areas of weakness this report has identified.
The FATF adopted this report at its October 2019 Plenary meeting.